Monday, January 19, 2015

Dude, What's Your Burn Rate??

Starts with a funny tweet:

Katelyn Gleason
@DanielleMorrill dude you're burning 200k a month? that means in your last raise you raised less than a year of burn?
Looking at her other posts about being a startup CEO (company that seems to help people track the ever growing and crowded "private company" space; a meta-startup?), it's easy to wonder whether startups' customers are their ostensible customers or the VCs who are really paying the salaries.


Nate Tobik said...

Here's what I don't get. According to another one of her posts they started bootstrapped, had some cash in the bank and experienced revenue growth. Also presumably profit because the cash in their account grew.

So they go from a profitable business that's growing fast to trying to raise money to hire people faster. Why? They want to grow even faster. I guess the tried and true slow growth sustainable business isn't enough for them. They'd rather strap rockets on their backs and try to get rich quick.

VC is a dangerous game. It amplifies a company, bad things are amplified, good things amplified.

Like in investing in general there are very few who are patient. Business a business slowly that will last a generation, or swing for the fences and go down in the next crash.

James said...

company that seems to help people track the ever growing and crowded "private company" space; a meta-startup?

This reminds me of something Jim Grant wrote about in one of his books: there was a printing company in NYC that grew quickly by printing financial documents for LBOs during the 1980s boom. After a few years the printer itself was LBO'd. It went bankrupt within a couple of years IIRC.

AllanF said...

I feel like I have mentioned him previously, but Michael O. Church does a good job blowing the smoke off the Silicon Valley business model.

It's no exaggeration to say it's lifted straight from the 1960's music industry.

I watched "20 Feet from Stardom" a couple days ago. All those aging back-up singers wistful about their missed stardom, made me think of aging programmers wistful about their missed IPO.

CP said...